Elon Musk Drops $10 Million On Tesla Stock, Defying Short-Sellers

Elon Musk, founder of futuristic companies including electric-vehicle maker Tesla, sunk $10 million into the company's stock last week in a vote of confidence as short-sellers prowl. (Photo by Alberto E. Rodriguez/Getty Images)

Musk’s trade price averaged $298.50 per share, with the stock down 6% since the start of the year. Shares of Tesla, the electric car company founded by Musk, have climbed 0.82% since Monday morning and trade around $302.82 per share Tuesday afternoon.

The vote of confidence in the company comes after Musk taunted short-sellers on Twitter.

“Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time,” Musk Tweeted on May 4.

“Looks like sooner than expected. The sheer magnitude of short carnage will be unreal. If you’re short, I suggest tiptoeing quietly to the exit …” he subtweeted, posting a Barron’s article, “Tesla Almost Out of Stock – for Short Sellers.”

Musk also declined to answer several questions from analysts on the company’s first-quarter conference call. Later he tweeted, “The 2 questioners I ignored on the Q1 call are sell-side analysts who represent a short seller thesis, not investors.”

Musk noted that Tesla had about 500,000 reservations, which it acquired without advertising or having cars in showrooms.

“Even after reaching 5k/week production, it would take 2 years to satisfy existing demand even if new sales dropped to 0,” he said in a tweet.

Short-sellers have been drawn to Tesla’s decade of lack of profit, which deepened to $1.96 billion in 2017. The company has also been burning through cash, ending March 2017 with $2.7 billion. In a recent conference call, Musk said he did not expect the company to raise more cash though it expects to have $3 billion in capital expenditures this year. Rather, he plans to expedite production of the Model 3 and turn a profit for the second half of the year.

Chanos also said he believed Musk would leave Tesla for his other company, SpaceX, which Musk’s share purchase seems to negate.

This article originally appeared HERE. Follow the author on Twitter here.

GuruFocus.com is owned by GuruFocus.com LLC, a Texas Limited Liability Company located in Plano, Texas. GuruFocus.com is engaged in the business of financial news, commentaries, research and publishing. GuruFocus.com, LLC is proud to be a Better Business Buro (BBB) accredite...